This is the case of Project manager planning risk response. Providing additional hours as a contingency is a risk mitigation strategy; therefore, Answer C is the best answer because we are talking about extra time or reserve time. Answer A is incorrect because padding has no basis and is not quantified as a risk or other type of estimate and even padding should be discouraged by project manager. Answer B is incorrect because adding contingency is not acceptance of a risk, it is simply mitigation. Answer D is near to the correct answer, but not the best answer, although what project manager is doing is a form of mitigatiaion

I too have the same doubt, why padding is not the correct option here?

While planning for a critical project delivery, you want to give yourself a few extra hours from budgeted time for a construction and testing phase to account for problems with unavailability of team resources for any reasons or delays in delivery. This scenario can be BEST described as ___